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disallowance of petitioner’s passthrough Marc losses pursuant to
section 1366(d).1 The issue for decision is the amount of
petitioner’s adjusted basis in Marc as of December 31, 1997.2
Background
The parties submitted this case fully stipulated pursuant to
Rule 122. We incorporate herein the stipulated facts. When
petitioner filed his petition, he resided in Chicago, Illinois.
Petitioner and His S Corporations
Petitioner is a real estate developer. During the relevant
years, he conducted his operations through multiple entities,
including several wholly owned S corporations. In addition to
Marc, these S corporations included: Lakeview Development of
Barrington, Inc. (Lakeview); Pleasant Prairie Development, Inc.
(Pleasant Prairie); and Silver Glen Development, Inc. (Silver
Glen).
For the year ending December 31, 1996, Marc sustained a loss
of $792,752 (the Marc loss). At that time, petitioner had zero
adjusted basis in Marc. Consequently, even though the Marc loss
was allocable to petitioner, see sec. 1366(b), he was unable to
deduct it in 1996, see sec. 1366(d). The Marc loss carried over
1 All section references are to the Internal Revenue Code in
effect for the taxable years in issue. All rule references are
to the Tax Court Rules of Practice and Procedure, as amended.
2 The deficiency for 1994 results from respondent’s
disallowance of a carryback from 1997.
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